The prison industry has a perverse incentive to keep the inmate population growing. Make it compete.

For too long, the incarceration industry has gotten away with high costs and low performance. It is time to introduce accountability, competition and rational incentives into the nation's prison systems--both public and private.

Federal and state governments spend more than $35 billion a year to lock up a greater portion of the population--one out of 138 Americans--than any other country on earth. The prison population keeps growing, mainly because our recidivism rates are sky-high. Half of former inmates return to prison. It is time to ask: What are we getting for the dollars spent on this growing revolving-door system?

Certainly prisoners should take personal responsibility for their own actions and their own rehabilitation. But with smart programs, many more should be finishing their sentences and coming home to be taxpaying citizens, not lifelong drains on the state's coffers.

Why are so many failing to rehabilitate themselves? One way to ask that question is this: Where are the financial incentives for prisons to properly perform their rehabilitative function? If anything, the captains of the incarceration industry have a perverse incentive to rehabilitate as few people as possible and keep business booming.

I am not saying that jailers do this consciously or purposefully. But the system is so broken that the very people we entrust to rehabilitate prisoners actually profit from prolonged prisoner stays and quick prisoner returns.

Take, for instance, the correctional officers union in California. This union has become one of the state's top political contributors. It has pushed not just for higher wages but for tougher laws and longer sentences.

The more people in jail, the more prisons (and prison guards) we need. And the longer the sentences of those convicted, the more secure the jobs in the prison. We now have a system that is divorced from its original purpose, which is to ensure neighborhood security, not job security.

Some states have turned to for-profit firms to run their prisons. But these private firms quickly get addicted to the government cash. They, too, have poor rehabilitation rates and spend their time lobbying state legislatures for tougher laws and longer sentences.

If you want to take on a big, failing, self-dealing bureaucracy that succeeds (and grows) by betraying the public interest, don't focus on the welfare system. Deal with the prison system. California spends $7.4 billion a year on prisons, more than on all its four-year colleges and universities combined. Nearly a dime out of every state dollar goes into California prisons, which house 170,000 inmates. What return do Californians get on their investment? An alarming 57% recidivism rate.

How can we justify continuing to spend $40,000 to $100,000 annually per inmate in neighborhoods where we spend less than $9,000 per pupil?

We should offer financial rewards to wardens who have the lowest recidivism rates over a period of years. Hold prisons accountable for the billions of dollars they spend each year. Increase funding for those that send people home who stay out of trouble. Decrease funding for those that send people home who then get into trouble. And close altogether those prisons that are notorious for being virtual crime universities.

Rather than blindly and endlessly funding prisons, why shouldn't states instead create what I call community safety superfunds, which would force the incarcerators (public and private) to compete with entrepreneurs, community programs and even other branches of government for those dollars?

If a community-based program can do a better job at keeping people out of prison with dimes than incarcerators have been doing with dollars, let's reallocate those funds. YouthBuild USA, for instance, works with unemployed 16- to 24-year-olds to prepare them for a high school diploma while learning job skills. Let's send more money their way.

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